Online Behavior Tracking and Privacy: 7 Worst Case Scenarios

If you've never been targeted by an ad because of your online behavior, then you're probably just not paying much attention.

According to an informal survey by the Interactive Advertising Bureau (IAB), more than 80% of advertising campaigns in 2009 involved tracking of some sort. The advertising business, in short, loves online tracking just about as much as privacy advocates hate it.

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Privacy advocates argue that online tracking undermines citizen rights and feels a little too big-brotherish for comfort. Their concerns were part of what led the FTC to release a report last February urging advertisers to evaluate their policies and beef up their privacy efforts. The industry's response has been to improve self-regulation — largely by adding opt-out buttons to online behavioral advertising.

Meanwhile, the rest of us are left wondering what the big deal is. We might be slightly creeped out when a particular ad follows us around the Internet, but is that really a debate worth getting worked up about?

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We spoke with experts on both sides to find out the very worst that could happen is if online tracking goes unchecked, or if regulations to control it are instated.

1. Consumers Remain Ignorant of Tracking

In an August 2010 study about Internet users' understanding of behavioral advertising, Aleecia McDonald asked survey participants to imagine that an ad company determined what ads to show to them based on the history of prior websites that they visited. Only 51% of participants recognized that this was something that "happens a lot right now."

When she asked them to imagine that ads served by their e-mail providers were based on the e-mails they sent and received, they were even less aware. The majority of participants didn't understand that this practice commonly occurred, and almost 30% believed that it would never occur. One participant in the study said that behavioral advertising sounded like something her "paranoid" friend would dream up, but not something that would ever occur in real life.

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This ignorance about the prevalence of online tracking, privacy advocates say, leads people to treat the web as though they're anonymous and makes them unable to protect themselves from unwanted tracking.

"Consumers treat the search engine box like their psychiatrist, their rabbi, their priest, their doctor," explains Christopher Soghoian, a privacy advocate who studies data security and privacy as a Ph.D. candidate at Indiana University. "People type the most intimate things into search engines and other websites primarily because they think they're anonymous. They type in things on WebMD that sometimes they wouldn't even ask their own doctors… And in fact, we are not anonymous, these sites are tracking us."

2. Online Tracking Evolves Past the "Creepy Line"

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Google CEO Eric Schmidt once was quoted saying, "There is what I call the creepy line. The Google policy on a lot of things is to get right up to the creepy line and not cross it."

This begs some questions: What is on the other side of the creepy line, and why does Google get to decide where it is?